Video: New Initiatives in Trading Room Compliance


Three industry experts discuss the challenges around capturing, stroring, analysing and reconstructing trade-based data across multiple channels – including voice-based data – and how new initiatives in trading room compliance can help address those challenges.


Andy Mather, Telstra
Gavin Davis, enepath
Steve Garrood, Insightful Technology

Mike O’Hara: Hello, and welcome to ‘Financial Markets Insights’. Today we speak with three industry experts about new initiatives in trading-room compliance, and how firms can pull together all of the necessary data they need in order to be able to investigate potential market abuse and to reconstruct trades on demand, particularly where voice trading is concerned.

But first let’s take a look at some of the issues that banks, brokers, and other market participants face around trading-room compliance and why this whole area is becoming a higher priority for them, particularly now.

Andy Mather: Since the crash in the financial markets, the regulators have become involved in the bank’s business, in a way that they hadn’t been before. What this means, really, is the bank’s got to be much more responsive, much more quickly, and give the regulator insight into multiple different data streams in different silos, in a timeframe they haven’t had to before.

Steve Garrood: Within the environment right now, compliance has kind of taken over, but it’s in silos. What we tend to find with new pressures that are coming in at CEO level, where custodial sentences and penalties come in that these guys have good regulation and good governance, they’re not getting the view they need. They’re always taking different data from different sources and trying to mix and match at the end of day, or pre a trade or post a trade.

Mike O’Hara: This world of siloed systems and multiple disparate sources of data can cause some serious headaches for firms. Where voice-based trades need to be incorporated into any kind of trade reconstruction, the challenges can be significant.

Gavin Davis: If you can’t capture good quality voice, the analytics stands no chance of being able to decipher what it is that’s said, put it into a textual format, which gives somebody the ability to actually then search for content that’s relevant to them.

Steve Garrood: In a very heavily regulated and governed market sector, the challenges around that are we find the normalisation of the data that is coming in. Whether that’s telco data, whether that’s IP-based data or, indeed, generated internally from the bank, it’s actually getting a complete view, from end to end, of that in one single pane.

Andy Mather: If you’re looking for nefarious trading activity, it’s a lot harder to find. Under the current regulation, you’re asked to put together the communication around a trade. That could be on IM, it could be on email, it could be on SMS, it could be on your desk phone or a turret. The challenge, really, is that what are you looking for, when are you looking for it, and how are you going to find it?

Gavin Davis: If you’ve got a trading floor with hundreds of people doing four or five hours per day, if you’re just searching for voice, how many people are you going to have to have to actually just be able to listen to those conversations, to pick out the relevant pieces that are required by compliance for them to be able to decipher exactly what’s happening during a working day on a trading floor?

Mike O’Hara: Given these challenges around consolidating all of this trade-related data, much of which is unstructured, what are some of the first steps that firms could be taking in order to ensure that they’re able to capture, store, index, and analyse this data in appropriate ways?

Gavin Davis: If you’re looking to analyse voice, you have to have a device that captures that voice as it’s spoken. It needs to be a device that separates all of the talkers, so, anybody who talks, you pick up their conversation separately to anybody else. So, having completely unmixed voice is one of the key components to be able to deliver a really high-quality solution directly to the analytics engine that you’re choosing to use within your business to pick up what is one of the words in your lexicon that you’re looking to search for.

Steve Garrood: Yes, having systems that work across platforms and across functions is very key and very critical. I think giving that agility around data, and analytics, and proactive monitoring is really important to some of the big enterprises, moving forward. Forgetting regulatory needs, it’s actually business agility and business-critical information that can be recycled fast is very, very important.

Mike O’Hara: So, if this is about business agility, as well as compliance, how can firms really gain an advantage in this area?

Steve Garrood: Telcos are generally good at doing telco stuff, software companies are generally good at doing software stuff, but people that can actually analyse and be proactive across the piece is really, really fundamental. That’s what’s going to give you a killer advantage. Whether you’re a bank or whether you’re a brokerage, that’s really key.

Andy Mather: Today, if you’re worried about regulation in the market and you’re worried about how you can remain compliant, I’d suggest you take a look at what’s available on the market. But my takeaway, I guess, is that you shouldn’t keep your data in silos. You should federate that so you can have easy access to all of your data in one place, in one go.

Mike O’Hara: Like anything in this industry, this isn’t all about the technology, but having the right technology in place to be able to capture the right information in the right way, and working with partners who can help firms distil that data so that it’s meaningful, could offer some serious advantages, from both a compliance and a business perspective. Thanks for watching. Goodbye.